There will be 804,000 benefited borrowers
The Joe Biden administration has announced that it will forgive $39 billion in student loan debt for 804,000 borrowers who have been paying off their debts for 20 years or more and should qualify for relief.
Through a statement issued on behalf of the Chief Executive and the Vice President, Kamala Harris, she expressed that throughout her career it has been a priority to reduce student loan debt and combat abusive practices in which they were not given adequate credit for their payments to students.
"As California Attorney General, I won a billion dollars for defrauded veterans and students by taking on predatory for-profit universities," says the vice president.
She also notes that both she and the president are committed to providing student loan debt relief to borrowers to "help them move on with their lives, whether they want to start a family, buy a home or become an entrepreneur."
Harris explained that both she and Biden will continue to fight for the benefit of the students. He recalled that last month, President Biden announced that he was seeking an alternative path to provide relief through the Higher Education Act and that they finalized their new Income-based repayment plan, which will cut monthly payments in half for undergraduate loans.
"Our Administration will continue to fight to ensure that Americans can access a high-quality post-secondary education without shouldering the burden of unmanageable student loan debt," the statement added.
Who qualifies and how can you apply to Biden's new plan?
According to Forbes, the nearly $40 billion in student loan forgiveness is provided through the IDR Account Adjustment.
IDR programs offer affordable payments to borrowers based on their income, with the possibility of student loan forgiveness after 20 or 25 years in the program.
The Biden administration sees the IDR account adjustment as a one-stop solution to these problems, as the Department of Education can credit borrowers with time for IDR loan forgiveness that otherwise would not have counted, even for borrowers who are not currently enrolled in an IDR plan, explains Forbes.
The outlet details that the 800,000 borrowers approved for student loan forgiveness this week represent the first wave of borrowers to benefit from the IDR account adjustment.
It should be recalled that the Department of Education had previously reported that it would first give priority to borrowers who had reached their loan forgiveness milestone of 20 or 25 years before August as a result of retroactive credit.
"Borrowers who will receive notifications in the coming days include those with Direct Loans or Federal Family Education Loans held by the Department (including Parent PLUS loans of any type) who have reached the required forgiveness threshold as a result of receiving credit for IDR forgiveness," read the announcement from the Department of Education.
Eligible borrowers will receive an email soon.
Forbes adds that additional borrowers may receive student loan forgiveness in the coming months as they also cross the 20- or 25-year threshold for loan forgiveness.
While other borrowers who receive IDR credit under the initiative but do not meet the threshold for loan forgiveness, sometime in 2024 they should start receiving notification from their status.
Borrowers with federal student loans from the Department of Education, including all Direct loans and some government Family Federal Education Loan (FFEL) loans, do not need to apply, as the IDR account adjustment is given automatically.
Those who do not reach the immediate student loan forgiveness milestone, they must continue to repay their loans under an IDR plan to make continued progress.
And for borrowers who have commercial FFEL loans and other non-direct loans, they may need to consolidate those loans through the federal direct consolidation program before the end of 2023 to benefit from the initiative, Forbes says.
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